FX Market Insights: European Parliamentary elections Five takeaways that matter

Last month’s European Parliamentary elections encompassed a 4-day vote that spanned 28 countries, 375 million voters and hundreds of parties. ¹ All Parliamentary candidates competed for a voice in the 751-seat assembly*, and the opportunity to shape legislation for the European economic bloc for the next five years.

More than 5o percent of eligible voters turned out - the highest rate in 20 years. ² The results were surprising and represent change in the European political landscape.

Here are five takeaways from the elections:

1. Surprise record turnout: voters are interested in Europe again.
   • One of the biggest surprises was the reappearance of voter interest in the EU Parliament, long seen as less important than national politics. This is a belated recognition of the high stakes at play.
   • Climate change, the migration crisis, and a push against the perceived “Brussels elite” all may have contributed to increased interest by voters.
2. The Green Wave: young voters take up the cause.
   • Environmental issues/climate change have become a priority with young voters. One-third of people under the age of 30 voted Green. ³
   • Green parties are conveying a fresh vision of social and economic issues. Pro-Europe and pro-immigrant, they stand in contrast to the center-left platform that dominated following the 2008 financial crisis.
   • The Greens, a party coalition focusing on environmental issues, is now the fourth largest voting bloc in the EU. ⁴
3. European’s political center weakened, and gains by the far-right fell short.
   • For the first time, the coalition of center-left and center-right parties will hold a minority in the European Parliament. Pro-business/pro-EU liberals and environmentalists took an unexpectedly larger share.
   • Eurosceptic and right-wing populist parties made sizable gains, but did not sweep into power as some experts had predicted.
   • European centrist parties are now faced with a new balance of power. They have no choice but to unify with liberal coalitions in order to effect change and maintain influence.
4. UK’s Brexit Party a big winner, but the pro-Remain parties still prevail.
   • It was something of a surprise that UK voters even participated in these elections, since the UK was set to exit the EU months ago.
   • Voters surprisingly gave the new Brexit Party, led by arch-Brexiteer and Eurosceptic Nigel Farage, more than 30 percent of the vote, devastating both the Conservative and Labor parties. ⁵
   • While the Brexit Party’s triumph will likely dominate headlines, the various pro-Remain parties combined still comprise the majority of seats.
5. European national politics: no consensus.
   • The election results show a big change in European politics – the lack of a majority for any one party – left, right or center. 
   • In France, the right-wing National Rally party won with only 23% of the vote: in Italy, the right-wing League party won with only 34%; in the UK, the right-wing Brexit Party won with only 31%.⁶

Final comment:

The new European Parliament will be challenged as it attempts to balance radically different ideologies and interests. However, the surge in voter support for liberal and green parties across Europe means that pro-European Union powers will continue to be in control. We deem that to be bullish for the EU.

*The Parliament’s 751 seats are distributed among member states based on population. Voters in each country cast ballots for national parties. Those parties are affiliated with parties at the European level, which in turn are represented in the Parliament through various political groups. The group with the most seats has the best chance of influencing the policy direction of the European Commission, where legislation is initiated and then approved by European Parliament. ⁷

^{1 New York Times, “European Parliamentary Elections: Five Biggest Takeaways”, May 27, 2019
2 Euronews.com, “Voter turnout rises for first time ever in EU elections”, euronews.com, May 28, 2019
3 Financial Times, “European elections 2019 – as it happened”, May 27, 2019
4 npr.org, “European Parliament Election Results: 4 Key Takeaways, May 27, 2019
5 bbc.com, “European elections 2019: Key points at a glance”, May 27, 2019
6 The Guardian, “European elections 2019: Tories unlikely to deliver on Brexit, says Farage – as it happened”, May 30, 2019
7 Bloomberg, “European Parliament 2019 Elections Results, May 30, 2019}

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